Correlation Between A10 Network and FirstGroup Plc
Can any of the company-specific risk be diversified away by investing in both A10 Network and FirstGroup Plc at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining A10 Network and FirstGroup Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A10 Network and FirstGroup plc, you can compare the effects of market volatilities on A10 Network and FirstGroup Plc and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in A10 Network with a short position of FirstGroup Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of A10 Network and FirstGroup Plc.
Diversification Opportunities for A10 Network and FirstGroup Plc
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between A10 and FirstGroup is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding A10 Network and FirstGroup plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstGroup plc and A10 Network is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on A10 Network are associated (or correlated) with FirstGroup Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstGroup plc has no effect on the direction of A10 Network i.e., A10 Network and FirstGroup Plc go up and down completely randomly.
Pair Corralation between A10 Network and FirstGroup Plc
Given the investment horizon of 90 days A10 Network is expected to under-perform the FirstGroup Plc. In addition to that, A10 Network is 1.38 times more volatile than FirstGroup plc. It trades about -0.06 of its total potential returns per unit of risk. FirstGroup plc is currently generating about 0.17 per unit of volatility. If you would invest 195.00 in FirstGroup plc on December 6, 2024 and sell it today you would earn a total of 10.00 from holding FirstGroup plc or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
A10 Network vs. FirstGroup plc
Performance |
| Timeline |
| A10 Network |
| FirstGroup plc |
A10 Network and FirstGroup Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with A10 Network and FirstGroup Plc
The main advantage of trading using opposite A10 Network and FirstGroup Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A10 Network position performs unexpectedly, FirstGroup Plc can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in FirstGroup Plc will offset losses from the drop in FirstGroup Plc's long position.| A10 Network vs. Evertec | ||
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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